Smart Ideas, Inc. has been underperforming its industry peers for quite some time. You are attempting...
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Smart Ideas, Inc. has been underperforming its industry peers for quite some time. You are attempting to determine the value of control and have the following information available: Smart Ideas, Inc.: Dividend Payout Ratio = 40% Beta = 1.00 %3! Growth Rate = 5.00% Peer Group: Dividend Payout Ratio = 50% Beta = 1.30 %3D Growth Rate =8.00% %3D Smart Ideas, Inc. generated $3.00 of earnings per share in the current year. The T-bill rate of return is 4.00% and the market rate of return is 10.00%. What is the per share value of Smart Ideas, Inc.'s stock without managerial control? Select one: A. $12.69 per share B. $25.20 per share C. $31.50 per share D. $41.15 per share E. None of the above Smart Ideas, Inc. has been underperforming its industry peers for quite some time. You are attempting to determine the value of control and have the following information available: Smart Ideas, Inc.: Dividend Payout Ratio = 40% Beta = 1.00 %3! Growth Rate = 5.00% Peer Group: Dividend Payout Ratio = 50% Beta = 1.30 %3D Growth Rate =8.00% %3D Smart Ideas, Inc. generated $3.00 of earnings per share in the current year. The T-bill rate of return is 4.00% and the market rate of return is 10.00%. What is the per share value of Smart Ideas, Inc.'s stock without managerial control? Select one: A. $12.69 per share B. $25.20 per share C. $31.50 per share D. $41.15 per share E. None of the above
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SOLUTION The per share value is computed as shown bel... View the full answer
Related Book For
Auditing and Assurance Services
ISBN: 978-0077862343
6th edition
Authors: Timothy Louwers, Robert Ramsay, David Sinason, Jerry Straws
Posted Date:
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